Whole Foods is officially breaking up with Instacart

By Sebastian Herrera sherrera@statesman.com

Thursday

Dec 13, 2018 at 5:19 PMDec 13, 2018 at 5:43 PM

When Instacart began delivering Whole Foods Market groceries in 2014, it was the first national partner the startup had landed. Instacart founder and CEO Apoorva Mehta once described both companies as sharing “a common vision to create great grocery shopping experience.”

That once-close partnership, however, will soon be ending.

Pushed to the side after Amazon bought Whole Foods in 2017 for $13.7 billion and started its own delivery operation at the grocer, Instacart executives told employees on Thursday that the company’s relationship with Whole Foods will begin to wind down in February and become non-existent in months.

The decision means that Instacart, which was reported to have signed a five-year contract with Whole Foods in 2016, will disappear from Whole Foods stores much before that timeline.

Out of Instacart’s 1,415 shoppers across 76 Whole Foods locations, 243 will be directly affected, according to Mehta. In total, Austin-based Whole Foods has 496 stores across the United States, Canada and the United Kingdom. Most of Instacart’s employees shop at the multiple grocery chains that the company has partnerships with, but some work exclusively at particular retailers.

“We’re committed to taking care of all impacted in-store Whole Foods shoppers who choose not to, or cannot, be placed in a new role,” Mehta wrote to employees in a blog post published on the website Medium. “I want to thank you all for your continued dedication to providing a great service for our customers.”

Founded in 2012 as an industry pioneer, Instacart quickly became the country’s premier on-demand grocery delivery system. Between January 2017 and this May, the company had grown from 30 U.S. markets to more than 240 and added major chains such as Kroger, Costco and Sprouts Farmers Market.

In the past year, however, Instacart has seen increased competition as large grocers such as H-E-B also began their own on-demand delivery, while Amazon amped up its operation at Whole Foods.

Whole Foods began to spell out its eventual break with Instacart months ago. In May, the American-Statesman reported that the grocer had been stripping away the startup’s branding at Whole Foods stores in Austin. At other stores around the nation, Whole Foods was reported to have also reduced the working space of Instacart.

While Instacart’s presence inside of Whole Foods has shrunk, Amazon’s has grown. The delivery service is now available in more than 60 cities, including Austin, while its on-demand grocery pickup offer, which began in August, is available in more than 20 cities.